Expert Opinion: The Italian Aerotaxi passenger tax

By Alud Davies
August 1, 2018 10:22

Franco Campomori is the principle of Campomori Aviation & Law, a Swiss-based law firm that specialises in Italian and cross-border legal and tax advice.

In this contributed article, Campomori examines the tax payable per private jet passenger on flights to and from Italy.
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The Italian aerotaxi passengers tax was introduced in the context of broader taxation targeting “luxury” assets (private aircraft and yachts), as well services such as aerotaxi services.

The tax regime is onerous — when compared to similar taxation in other EU countries – and has created difficulties in its application and compliance, especially by international AOC holders carrying out commercial operations.

How onerous? Let’s consider a return aerotaxi flight from Biggin Hill to Milan Linate with 6 passengers. The Biggin Hill – Milan flight would be subject to approximately euro 175 of HM Revenue & Customs tax and euro 600 of Italian aerotaxi passengers tax (yes, the tax is also due on inbound flights). The return flight from Milan to Oxford would be subject to another euro 600 Italian aerotaxi passengers tax and no HM Revenue & Customs sax. A total of euro 1,200 of Italian taxes compared to euro 175 of passenger tax in the UK. Le Bourget – Olbia Costa Smeralda return flight with 4 passengers? Approximately euro 45 of French taxes and euro 800 of Italian passengers taxes. And so on …

The purpose of this note is to clarify the regime, its practical implications and some consequences which may derive from non-compliance or late compliance.

The tax is due by each passenger and paid to the operator as follows:

• euro 10 for each passenger for each flight of less than 100 km to, from or within the Italian territory (targeted primarily at helicopter transportation services)

• euro 100 for each passenger for each flight of more than 100 km but less than 1500 km to, from or within the Italian territory

• euro 200 for each passenger for each flight to or from the Italian territory in excess of 1500 km

For calculation purposes, flight distance between point of departure and point of arrival (regardless of any technical stop-over) is calculated by reference to the great-circle route plus 95 km.

The tax is expressed to be due on “aerotaxi flights”, defined in an implementing directive as passengers’ flights where the aircraft is chartered for its entire capacity. More coherently, “aerotaxi flights”, also for the purposes of this tax, are limited to aircraft having seating capacities not exceeding 19 passengers. Therefore, the tax is due for commercial operations by AOC holders and not due for private flights.

Who pays the tax?

The tax is due and payable by each passenger to the operator, who is then obliged to pay it to the tax authorities once collected. The amount of the tax is not part of the operator services subject to VAT. The operator acts as a collecting agent.

When is the tax paid?

Time of payment of the tax by the operator depends on the aircraft’s country of registration.

For EU-registered aircraft and aircraft registered within the European Economic Area (EU member states plus Iceland, Liechtenstein and Norway) the tax is due at the end of each month by reference to the passengers/flights carried out in the previous month.

For aircraft registered in other countries the tax is payable, for each passenger/flight, prior to departure from Italian territory or within the day following the date of arrival on Italian territory.

How is the tax paid?

The tax is paid via the F24 form, typically used in Italy for tax-payment purposes, but requires an Italian tax code.

Non-Italian operators not having an Italian tax code (unless with an Italian permanent establishment), can pay the tax via euro bank transfers as follows:

Beneficiary: “Bilancio dello Stato al Capo 8 – Capitolo 1224”

IBAN IT48 A010 0003 2453 4800 8122 400

BIC: BITAITRRENT

Payment description: (i) operator name; (ii) number of passengers; (iii) flight type (A for flights of less than 1500 km, B for flights of more than 1500 km); (iv) date of flight (day/month/year)

Tax assessment

If the operator does not pay the tax when it becomes due (see par. 1.3-1.4 above), a tax assessment and a subsequent request of payment may be issued by the Italian authorities as follows:

• The operator is served with a notice of assessment (so called “verbale di constatazione”, “Notice of Assessment”) issued by the Tax Police having authority at the airport where the concerned flight operations took place. The Notice of Assessment should contain a clear indication of the flights and number of passengers, the amount of tax due and the amount of penalty (equal to 30% of the overdue amounts). The operator is given 60 days grace period to raise comments on the Notice of Assessment;

• The Notice of Assessment is subsequently sent (this may take several months) by the Tax Police to the competent Inland Revenue Authority which, in case of non-payment by the operator in the meantime, issues to the operator an order of payment (so called “avviso di liquidazione”, “Order of Payment”). The Order of Payment is issued for an overall amount including: (i) the tax due based on a flight’s distance and the number of passengers carried by the operator (see par. 1.1. above); (ii) the 30% penalty on the amounts overdue; and (iii) interest for late payment, accruing from when the tax becomes due (see par. 1.3 above) to the date the Order of Payment is served to the operator.

Remedies and challenges

After having received a Notice of Assessment the operator may elect to proceed with a voluntary payment of the overdue tax according to a procedure named “ravvedimento operoso”. Under this procedure, depending on the overdue period, the 30% penalty charged with the Notice of Assessment can be significantly reduced. In this context the operator may also rectify some information contained in the Notice of Assessment to the extent that it is not entirely correct (e.g. number of passengers on a specific flight, incorrect AOC holder being reported etc.).

This is an option often adopted by international operators that where unaware of the tax or did not know how to comply with it correctly, since it enables a significant saving on the otherwise due 30% penalty.

A voluntary payment is an available option also before having received a Notice of Assessment for a specific airport if an operator decided to comply with its tax positions unilaterally. In this case, the penalty amounts are further reduced from those due upon a notice of assessment being received.

If upon having received an Order of Payment an operator believes that the claimed tax is not entirely due or has not been calculated accurately, it can apply for a tax settlement procedure (“accertamento con adesione”) which involves a formal negotiation with the tax authorities.

Finally, if the operator wishes to challenge the grounds of the Order of Payment, this can be done before the competent local tax courts. The challenge can be filed within 60 days of receipt of the Order of Payment.